1. Tracking Your Progress
Keeping good personal records makes budgeting and long-range planning easier.
Your records also make it easier to prepare income tax returns, credit applications, and other financial forms.
You should keep five types of personal records:
Income and expenses records
Net worth statement
Personal property inventory
Tax records
Other miscellaneous documents
Chapter 4
© 2016 South-Western, Cengage Learning

2. Income and Expenses Records
Examples of income records
W-2 forms
Statements from banks
Statements from investment companies
Examples of expense records
Receipts listing charitable contributions
Medical bills
Receipts for work-related expenses
Chapter 4
© 2016 South-Western, Cengage Learning

3. Net Worth Statement Assets – Liabilities = Net worth
A net worth statement shows a person’s net worth based on his or her assets and liabilities.
Assets are items of value that a person owns.
Money or debts owed to others are called liabilities.
When you subtract liabilities from assets, the difference is known as net worth.
Assets – Liabilities = Net worth
Chapter 4
© 2016 South-Western, Cengage Learning

4. Net Worth Statement Assets Liabilities Checking account $500
Allison Jacobs
January 1, 20—
Assets
Liabilities
Checking account
$500
Loan on car
$1,800
Savings account
900
Loan from parents
300
Car value
3,000
Total liabilities
$2,100
Personal property
5,000
Net Worth
Total assets
$9,400
Assets minus liabilities
$7,300
Total liabilities and net worth
These two numbers must be the same.
Chapter 4
© 2016 South-Western, Cengage Learning

5. Solvent vs. Insolvent
Solvent = Good financial standing; positive. Assets are greater than liabilities.
Insolvent = Poor financial standing; negative. Liabilities are greater than assets.
Chapter 8

6. Personal Property Inventory
A personal property inventory is a list of the valuable items you own, along with their purchase prices and approximate current values.
Personal property includes anything of value that you own, except real estate—clothing, furniture, appliances, and so forth.
Chapter 4
© 2016 South-Western, Cengage Learning

7. Personal Property Inventory
(continued)
Chapter 4
© 2016 South-Western, Cengage Learning

8. Tax Records
All taxpayers should keep copies of their tax records for at least three years after they file their tax returns.
Tax records include the tax return itself (a copy of the signed form), W-2 forms, and other receipts verifying income and expenses listed on each return.
Keep tax records in a safe place in case of an audit.
Chapter 4
© 2016 South-Western, Cengage Learning

9. Other Records Lists of credit card numbers Car titles
Insurance policies
Birth certificates
Marriage certificates
Wills
Passports
Chapter 4
© 2016 South-Western, Cengage Learning